What is the timeframe for depreciating fixed assets? What is the straight-line method of depreciation?
What is the timeframe for depreciating fixed assets?
Pursuant to Appendix 1 issued together Circular 45/2013/TT-BTC stipulates the time frame for depreciation of fixed assets as follows:
What is the content of the straight-line method of depreciation?
Pursuant to Appendix 2 issued together Circular 45/2013/TT-BTC stipulating the contents of the straight-line method of depreciation include:
- Fixed assets in the enterprise are depreciated using the straight-line method as follows:
+ Determination of the depreciation rateThe average annual depreciation for fixed assets is according to the following formula:
+ The average monthly depreciation rate is equal to the depreciation payable for the whole year divided by 12 months.
- In case the depreciation period or historical cost of fixed assets changes, the enterprise must re-determine the average depreciation rate of fixed assets by dividing the residual value in the accounting books (: ) for the re-determinedamortization period or the remaining amortization period (defined as the difference between the registered depreciation period minus the amortized period) of the fixed asset.
- The depreciation rate for the last year of the fixed asset's depreciation period is determined as the difference between the historical cost of the fixed asset and the accumulated depreciation made to the year before the last year of the asset. that fixed.
- Example of calculating and depreciating fixed assets:
Example: Company A buys a fixed asset (100% new) with the invoice price of 119 million dong, the purchase discount is 5 million dong, the shipping cost is 5 million dong. Transfer fee is 3 million dong, installation and testing cost is 3 million dong.
+ Knowing that fixed assets have a technical life of 12 years, the depreciation period of fixed assets of the enterprise is expected to be 10 years (in accordance with the provisions in Appendix 1 issued together with Circular No. 45/2013/TT-BTC), the property was put into use on January 1, 2013.
Historical cost of fixed assets = 119 million - 5 million + 3 million + 3 million = 120 million VND
Average annual depreciation = 120 million : 10 years = 12 million VND/year.
Average monthly depreciation = 12 million dong: 12 months = 1 million dong/month
Every year, the enterprise deducts 12 million dong of depreciation expense for that fixed asset into business expenses.
+ After 5 years of use, the enterprise upgrades fixed assets with a total cost of 30 million VND, the useful life is re-evaluated at 6 years (an increase of 1 year compared to the initial registered use time). ), completion date and put into use is 1/1/2018.
Cost of fixed assets = VND 120 million + VND 30 million = VND 150 million
Accumulated depreciation = VND 12 million (x) 5 years = VND 60 million
Remaining book value = VND 150 million - 60 million VND = 90 million VND
Average annual depreciation = 90 million VND: 6 years = 15 million VND/year
Average monthly depreciation = 15,000,000 VND: 12 months = 1,250,000 VND / month
From 2018 onwards, the enterprise depreciates into business expenses every month 1,250,000 VND for fixed assets that have just been upgraded.
What is the timeframe for depreciating fixed assets? What is the straight-line method of depreciation?
How to determine the depreciation rate for fixed assets put into use before 01/01/2013?
Pursuant to Appendix 2 issued together Circular 45/2013/TT-BTC stipulating the determination of the depreciation rate for fixed assets put into use before 01/01/2013:
- How to determine the depreciation rate:
+ Based on the data on accounting books and records of fixed assets to determine the residual value in accounting books of fixed assets.
+ Determine the remaining amortization time of the fixed asset according to the following formula:
In which:
T : The remaining amortization time of the fixed asset
T1 : Depreciation time of the fixed asset to be determined. prescribed in Appendix 1 issued together with Circular No. 203/2009/TT-BTC.
T2 : Depreciation period of fixed assets is determined according to the provisions in Appendix 1 issued together with Circular No. .../2013/TT-BTC.
t1 : Actual time of depreciation of fixed assets
- Determine annual depreciation rate (for the remaining years of fixed assets) as follows:
+ Average monthly depreciation in numbers Depreciation must be deducted for the whole year divided by 12 months.
- Example of calculating and depreciating fixed assets:
- Example: An enterprise uses a mining machine with original cost of 600 million dong from January 1, 2011. The period of use determined according to the provisions in Appendix 1 issued together with Circular No. 203/2009/TT-BTC is 10 years. The used time of this mining machine by the end of December 31, 2012 is 2 years. Accumulated depreciation is VND 120 million.
+ The remaining value in the accounting books of the mining machine is VND 480 million.
+ Enterprises determine the depreciation period of mining machines to be 15 years according to Appendix I of Circular No. 45/2013/TT-BTC.
+ Determine the remaining depreciation period of the mining machine as follows:
+ Average annual depreciation rate = 480 million VND : 12 years = 40 million VND/year (according to Circular No. 45/2013/TT- BTC)
Average monthly depreciation = 40 million VND: 12 months = 3,333 million VND/month
From January 1, 2013 to the end of December 31, 2024, the enterprise depreciates this mining machine. in business expenses per month is 3,333 million dong.
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